10-year Treasury climbs to 2.91% on less than enthusiastic bills auction
Not a good way to begin if you have to sell $441 billion in net debt in the first quarter of 2018. This morning the U.S. Treasury sold $96 billion of short-term bills at yields unseen since 2008.
Where do bond yields matter?
If you needed a lesson in the complex and sometimes frustratingly perverse bond market, you got one yesterday, Monday February 6. Stocks went to hell in a hand basket and bonds, which had been selling off, rallied on a classic flight to safety. Bond yields, rather than rising (which means bond prices are falling) actually retreated on that surge of demand with the yield on the 10-year Treasury falling a massive (for the Treasury market) 14 basis points to 2.71% from 2.85% the day before. (It takes 100 basis points to equal a percentage point.) That marked a disappointing debut to my position in my Volatility Portfolio in the ProShares Short 7-10 Year Treasury ETF (TBX), which fell 0.72% on the day. I suppose that’s better than taking a 4.1% loss in the Standard & Poor’s 500 stock index on the day, but, honestly, the point of this hedge was to make money not simply to lose less of it.
The next BIG test for the debt markets: Tuesday’s auction of Treasury bills
We won’t know exactly how much four-week Treasury paper the government will try to sell on Tuesday until Monday, but we already know that the short-term Treasury market is in trouble. With Congress still fighting over a bill to extend funding to keep the government open past the February 8 deadline, there’s not even a credible effort to raise the ceiling on what the government can borrow.
The debt ceiling crisis will strike sooner than expected thanks to tax cuts
Next week would be a heavy lift for a Congress that functioned like a well-oiled machine. Pass a bill to fund the government. Reconcile Republican demands for more defense spending with Democratic demands for an equal increase in domestic programs. Strike an immigration deal that heads off deportation for 700,000 or more children of illegal immigrants. Find even $200 billion for infrastructure spending. And then there’s the little issue of the debt ceiling.
Saturday Night Quarterback says, For the week ahead expect…
The shutdown of the Federal government the occurred as expected on Friday night won’t have much effect on U.S. or global stock markets until it exceeds the 2013 shutdown in duration. That shutdown lasted from October 1 to October 17. Each week of the shutdown shaves 0.1% to 0.2% off the GDP growth rate, according to calculations from Standard & Poor’s. And in past shutdowns the economy has quickly recouped that loss GDP once the government has gone back into operation .Judging from history the stock market doesn’t like a shutdown but it doesn’t ‘t see it as a big deal. Could it be different this time? Sure.
Adding a gold ETF on today’s drop in the metal on hurricane, North Korea relief
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It’s a new month but the same old Congress–as a debt-ceiling deal descends into usual chaos
Please extend the greeting of your choice to the U.S. Congress, back in “action” today after a long August recess. This morning Democrats said they would vote for disaster relief for victims of Hurricane Harvey if Republicans attached the measure to a three-month extension of the debt-ceiling. If Congress doesn’t raise the ceiling on the amount of debt that the U.S. Treasury can sell, the government will not be able to pay at least some of its bills after September 29. House Speaker Paul Ryan ridiculed the proposal
The bond market gets nervous about the debt ceiling and other DC shenanigans
You wouldn’t know that there was anything to worry about from the U.S. stock market. So what that the President has threatened to shut down the government unless Congress funds The Wall. So what that the tax cuts so near and dear to CEOs won’t happen unless there is a budget or some stop gap funding measure by October 1. So what the Federal Reserve refuses to take another interest rate increase off the table. But if you look at the bond market, you will see signs of concern.
Trump’s threat to shut down the government if Congress doesn’t vote funding to build The Wall unnerves Wall Street today
We all know that getting Congress to pass a debt ceiling increase by September 29 and also to pass a budget or at least a continuing resolution to fund operations of the government past September 30 is going to be one long, hard lift. But there’s nothing like a threat from the President to veto legislation to keep the government running if Congress doesn’t fund the construction of The Wall to focus attention on how hard that task is.
Good luck on getting that done: Debt ceiling truce looks to be over (if it ever really existed)
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Notes You Need for August 2: Amazon gaming, EuroZone GDP, volatility, VMC, July jobs from ADP, AMC, debt ceiling
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